CHULA VISTA -- Duke Energy Power Services (DEPS) has finalized a 10-year lease with the Port of San Diego to operate and eventually replace its 706-megawatt South Bay Power Plant located just south of San Diego in the city of Chula Vista.

"We are very pleased to have signed a lease to operate the South Bay Power Plant, and we look forward to dispatching the plant in California’s competitive wholesale market in the coming months," said Tom Guthrie, DEPS’ manager of South Bay Power Plant. "The plant has historically operated at very high capacity levels and is very well positioned in Southern California’s transmission grid to meet the region’s growing electricity demand."

The port reached an agreement to purchase the plant from San Diego Gas & Electric Company in November for approximately $110 million. The principal associated with the bonds used to purchase the plant will total approximately $115 million. As part of the lease agreement, Duke Energy will pay the principal and interest payments associated with the bonds. At the end of the lease, Duke Energy will assume ownership of the plant’s air permits and use them for the replacement power plant to be built in the area.

For the past several months, a transition team has been working at the plant to transfer the permits and handle issues necessary for Duke to begin its lease. San Diego Gas & Electric employees currently working at the plant will work as DEPS’ contractors under a two-year operating and maintenance agreement.

The lease will bring DEPS’ total generation capacity in California to approximately 5,000 megawatts in operation or under development.

Duke Energy (NYSE:DUK) is a global energy company with more than $26 billion in assets. Headquartered in Charlotte, N.C., the company reaches into more than 50 countries, producing energy, transporting energy, marketing energy and providing energy services. In the United States, Duke Energy companies provide electric service to approximately two million customers in North Carolina and South Carolina; operate interstate pipelines that deliver natural gas to various regions of the country; and are leading marketers of electricity, natural gas and natural gas liquids. Additional information about the company is available on the Internet at: www.duke-energy.com.